It's WNYC's Financial 411, our take on the economic news of the day...
2010 will be remembered as the year that rocked the Euro. First there was the debt crisis in Greece. That was followed by a gigantic bank bailout in Ireland. And many fear Portugal will need foreign help to stay afloat.
With the Eurozone under threat from countries with weak economies and unstable public finances, you might think other countries would now be wary of joining it.
Not Estonia. As the clock strikes midnight there - that's 5 p.m. here in New York - the tiny Baltic nation ditches its own currency, the kroon, to become the 17th country using the Euro.
New Yorkers are using the end of the year to reflect on their own financial security.
Gil Huebsch is a computer security specialist, who's watched several colleagues get pink slips. His take on 2010: "Could of been a lot worse, at least I kept my job."
But he hasn't has had a raise for a while and that's effected his pension--right when he's getting ready to retire.
"Three years without it, it's an easy 10, 12 percent less money I'm gonna get at retirement."
Still, Huebsch says, at least his investments have recovered much of their value with the rising stock market.
Trading was light on this last day of the year, and markets didn't budge much. The Dow Jones added 8 points to close at 11,578. The S&P 500 was flat at 1,258, and the Nasdaq also barely moved, ending at 1,258.
This week, market watchers looked at the numbers and concluded 2010 was a really good year for stocks, and a pretty good year for bonds too.
Mayor Bloomberg's reputation as a manager took a hit as he failed to get snow cleared quickly enough from New York Streets and attorney general Andrew Cuomo ended a bitter feud with a financier, as he prepared to be sworn in as New York's next Governor.
We'll review the week's business and economic news now with Greg David, Director of the Business & Economics Reporting Program at the CUNY Graduate School of Journalism.
The Dow Jones Industrial Average had only very small gains today, but for the year, the index added over a thousand points, or about 11 percent. What has powered the rebound?
Well, expectations of an economic recovery. Investors are increasingly convinced that things are going to get better. And of course, they're increasingly convinced that the big gains that the bond market saw, especially earlier in the year, aren't gong to continue. Eleven percent's a really good number. Puts us close to where we were in 2008. Most of it came in the second half of the year. And you know the Nasdaq did substantially better; more than 17 percent.
How about bond markets? There's no index like the Dow or the S&P that enables us to easily track their health. How did they do?
They did very well earlier in the year. I'm mostly invested in a bond fund and I was doing great till about November. The issue is as interest rates fall, bond prices rise. That's why the bond market had such a great period. But interest rates have risen over the last six weeks or so and that's taken some of the edge of the bond market. And convince some people that the state markets the place to be in 2011, not the bond market.
So what will this mean for state and local governments? Will they have a harder time borrowing in 2011?
Well I don't think they'll have a harder time borrowing. It's going to be a little more expensive though. But interest rates by any historic level continue to be very low. And it's important to home buyers too. Mortgage rates are up, I think to up to a half or three quarters of a point in the last six weeks. If you look at it historically, they're still in the low five percent area.
Mayor Bloomberg is still defending his snow-clearing efforts after the monster blizzard that was on Sunday and Monday, while admitting the city could have done a better job clearing roads. Do you think the damage to his reputation will eventually melt like the snow?
No I don't actually. Because I think this is the second major problem we've had in just a couple months. Remember Cathie Black and the schools chancellor. This is what happens when you're in the third term. This is what happens when you're a lame duck. A lot of people who are normal Bloomberg supporters wasted no time in criticizing him. Now the one thing that could help him is if we find out that indeed there was a sanitation worker slow down or the union was dragging its feet. If they played a major role in this, then that will help the mayor's reputation.
Finally, Andrew Cuomo will be sworn in tonight as New York's 56th Governor, in a private ceremony at the governor's mansion. Yesterday, we learned Cuomo, who is still the state Attorney General for a few more hours, reached a settlement with Steven Rattner. He's the financier who was accused of paying kickbacks in exchange for contracts with the state pension fund under former comptroller Alan Hevesi. At times the dispute between him, Rattner and Cuomo seemed to be very personal, and even venomous.
I think they both decided it wasn't getting them anywhere. So they settled. Rattner's going to pay $10 million. That's about half what Cuomo wanted. He's barred from some activities for the next few years, but not for life. And Cuomo seems to have been determined to wrap up the pension fund investigation on his watch and not leave it for his successor, Eric Schneiderman.
So a victory for Steven Rattner?
A compromise for both of them on the way out, but in the long term, it's not a victory for Rattner, whose reputation will be forever tarnished by what he did with the pension fund.
Greg David of the CUNY Journalism School, he also blogs at the Crain's New York Web site.